Security

Commonwealth Bank clarification on remuneration

15 April 2010

FACT SHEET

Commonwealth Bank clarification on remuneration

The Finance Sector Union (FSU) recently brought a case before Fair Work Australia asserting that Commonwealth Bank had not bargained in good faith when providing employees with two separate pay rises (1.5 per cent for staff earning under $100,000 on 1 July 2009 and 2 per cent to all eligible staff on 1 January 2010).

Following recent media coverage, which was not clear on the salary increases that the Bank has provided staff, we clarify our position below.

Commonwealth Bank’s Enterprise Bargaining Agreements (EBA’s) expired in 2004 and since then, we have provided our employees with regular pay increases outside any union negotiations. We strongly believe this has been the right thing to do. Our approach has always been, and will continue to be, to make remuneration decisions that are fair and equitable and in the best interests of both our people and our business.

Negotiations to secure a new EBA were initiated by the Bank in 2007. During these negotiations, the Bank has made 3 unilateral pay increases – 4 per cent on 1 July 2008, 1.5 per cent for staff earning under $100,000 on 1 July 2009 and 2 per cent to all eligible staff on 1 January 2010.

The Bank took a cautious approach to pay increases during the global economic downturn. A 1.5 per cent increase was unilaterally provided to staff earning under $100,000 on 1 July 2009. On 1 July 2009 we also reduced the salaries of our CEO and Directors by 10 per cent, our Executive Committee members by 5 per cent and committed to no major offshoring initiatives for 3 years in order to protect our Australian based workforce.

At that time, we also committed to our employees that we would monitor economic conditions and respond when we felt the time was right again to award pay increases. As a result, when we were comfortable with the performance of the business, and more certain about the economic indicators, we increased salaries for all eligible staff by 2 per cent from 1 January 2010.

The pay increase from 1 January excluded those employees who did not reach a ‘meets expectations’ performance measure. This decision acknowledged those who made a strong contribution to our business performance during the economic downturn and remains consistent with our approach to fair and performance-related remuneration for our people.

In summary, during a time of real economic uncertainty, the majority of our employees have received a 3.5 per cent salary increase which has been met with an overwhelmingly positive response from our people. In addition, they have continued to receive bonus payments, calculated in the same way as in previous years and also received a free allocation of Commonwealth Bank shares.

Recent media reports suggest the FSU requested a 4 per cent salary increase effective 1 January 2010. These reports are incorrect. The FSU request was for 2.5 per cent from 1 January 2010 and a further 4 per cent from 1 July 2010.

We will continue to ensure that our overriding principle of being fair to our employees remains a priority.